Bank reports begin with BMO profit up 28%

TORONTO — The Bank of Montreal grew its second-quarter net income by 28 per cent and boosted its quarterly dividend, even as profits in its U.S. personal and commercial banking business declined.

The Toronto-based bank (TSX:BMO), the first of the big Canadian lenders to report its second-quarter results, had $1.25 billion of net income, helped by higher earnings from its wealth management and capital markets divisions.

But earnings from its U.S. personal and commercial banking segment decreased by seven per cent from a year ago to $248 million, mainly due to higher provisions for credit losses.

BMO also hiked its quarterly dividend on Wednesday by two cents to 90 cents per share, payable on Aug. 28.

Edward Jones analyst Jim Shanahan said he had been looking for stronger results out of BMO’s U.S. franchise to compensate for the challenging operating environment at home.

Canadian banks face a number of headwinds, including overstretched borrowers and worries about high house prices and the health of the mortgage market.

“When we’re really concerned about some of the other challenges in Canada with consumer leverage and home prices, we would look to the U.S. to be a source of strength in earnings stability — and for there to be softness here is a little bit disconcerting,” Shanahan said.

The company’s shares were down $2.82, or nearly three per cent, to $92.31 on the Toronto Stock Exchange in late morning trading Wednesday.

Analysts noted that BMO reported no deterioration in Canadian residential mortgages. In spite of that, questions about the mortgage market and the recent liquidity crisis at mortgage lender Home Capital are likely to dominate upcoming conference calls for all of the major Canadian banks, Shanahan said.

Royal Bank (TSX:RY), TD Bank (TSX:TD) and CIBC (TSX:CM) will report their second-quarter results on Thursday. Scotiabank (TSX:BNS) will release its earnings next Tuesday.

“I imagine there will be a lot of questions about Home Capital and the mortgage broker part of the market,” Shanahan said.

BMO CEO Bill Downe said the bank — which reported $5.74 billion in quarterly revenue, up from $5.10 billion a year ago — benefited from having a diversified business model.

Its wealth management arm had $251 million of reported net income, up 86 per cent from a year ago, while its capital markets division grew its profit by 12 per cent year-over-year to $321 million.

BMO’s Canadian personal and commercial banking segment had $531 million of reported net income, up one per cent from a year ago.

“While there has been a moderation in loan and deposit growth in the United States reflective of slower than anticipated business activity in the first calendar quarter, we are well-positioned to continue to build on the strength of our U.S. franchise,” Downe said in a statement.

BMO’s net income was equal to $1.84 per share, up from $1.45 per share during the second quarter of 2016 when its net income was $973 million.

Just Posted

WATCH: Families make yo-yos and weaved yarn at Red Deer Museum and Art Gallery

It was all about making yo-yos and yarn bombing at Red Deer… Continue reading

Solve mysteries with Sherlock Holmes and Dr. Watson in Red Deer

At three sold-out one act Sherlock Holmes plays in Red Deer, theatre… Continue reading

Quebec man arrested in slaying of Alberta woman 16 years ago

AIRDRIE, Alta. — A Quebec man has been arrested in the slaying… Continue reading

Construction underway at Medicine River Wildlife Centre in Red Deer

The new building is twice the size of the old one

Fish for free

No license is required to ice fish on Family Day weekend

WATCH Replay Red Deer Feb. 18: Your weekly news highlights

Watch news from Red Deer and Central Alberta

How to keep local news visible in your Facebook feed

Facebook has changed the news feed to emphasize personal connections. You might see less news.

Trump gets angry about election meddling, but not at Russia

‘Weirdest thing’: Trump expresses anger, but not over Russian election-meddling

New doping charge could hurt Russia’s chance at reinstatement

Russia could lose its chance to be reinstated before the end of the Winter Olympics because of a doping charge against curling bronze medallist Alexander Krushelnitsky.

#Metoo movement causing confusion in many men, fear of missteps with women: experts

Being painted by the same sweeping brush as those alleged to have mistreated women has angered men

Virtue and Moir break their own world record

Virtue and Moir break short dance record to sit first in ice dance at Olympics

Calgary man dies in Mexico following sudden illness

Troy Black was with his wife, Lindsay, in Puerto Vallarta when he began vomiting blood on Thursday

Life or death main decision for school shooting suspect

FORT LAUDERDALE, Fla. — The evidence against the Florida school shooting suspect… Continue reading

Man who stole millions from Seabird Island band sentenced to 4.5 years jail

Stephen MacKinnon sentenced in Chilliwack court for stealing $2.3 million over eight years

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month